PROBLEM 3 A jumbo CD is 115 days from maturity and has a quoted nominal yield of 6.56 percent. a. Calculate the bond equivalent yield b. Calculate the bond effective annual return
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- Question 1. Duration and Banking Consider a 5-year bond with annual coupon payments. The bond has a face value (prin- cipal) of $100 and sells for $95. Its coupon rate is 3%. (The coupon rate is the ratio between the coupon value and the face value). The face value is paid at the maturity year in addition to the last coupon payment. 1. Calculate the bond's yield to maturity (YTM) and duration using its YTM. 2. Suppose the bond's YTM changes in the same way as a 5-year T-bill interest rate. Use the bond's modified duration to evaluate the relative change in the 5-year bond's value if the interest rate on 5-year T-bills falls by one basis point, that is, by 0.0001. This part was extracted from the balance sheet of the First Bank of Australia: Assets (Billion AUD) Bond 80 Liabilities (Billion AUD) Fixed-rate liabilities 60 where "Bond" here refers to the bond we specified above and the fixed-rate liabilities (banks future payment obligations) have an average duration of 4 years and YTM of…Yield to maturity The Salem Company bond currently sells for $684.14, has a coupon interest rate of 8% and a $1000 par value, pays interest annually, and has 17 years to maturity. a. Calculate the yield to maturity (YTM) on this bond. b. Explain the relationship that exists between the coupon interest rate and yield to maturity and the par value and market value of a bond. a. The yield to maturity on this bond is %. (Round to three decimal places.)15.4.1 Quesion Help Y sts Use the method of averages to find the approximate yield rate for the bond shown in the table below. The bond is to be redeemed at par. Face Value Bond Rate Payable Semi-annually Market Quotation Time Before Maturity $5,000 7 years 103.375
- Yield to maturity The bond shown in the following table pays interest annually. Coupon interest rate Years to maturity Par value $100 13% 19 Current value $140 a. Calculate the yield to maturity (YTM) for the bond. The yield to maturity (YTM) for the bond is nothing % (Round to two decimal places.) b. What relationship exists between the coupon interest rate and yield to maturity and the par value and market value of a bond? Explain.What is the coupon payment for the bond in the table? Assume semi-annual payments. Bond Coupon Rate Yield Price Years to maturity Apple B ? 4.9% $921.72 281. Answer the below questions for bond A. Bond A Coupon 8% Yield to maturity 10% Maturity (years) 10 Par $100.000 Price $87.5378 (a) Calculate the actual price of the bond for a 100-basis-point increase in interest rates. (b) Using duration, estimate the price of the bond for a 100-basis-point increase in interest rates. (c) Using both duration and convexity measures, estimate the price of the bond for a 100-basis-point increase in interest rates. (d) Without working through calculations, indicate whether the duration of bond A would be higher or lower if the yield to maturity is 12% rather than 10%.
- Bond Valuation1. A 3-year bond with 10% coupon rate and $1000 face value yield to maturity is 8% . Assuming annualcoupon payment, calculate the price of the bond. 2. A 10-year bond with 12.5% coupon rate and $1000 face value yield to maturity is 14.5% . Assumingannual coupon payment, calculate the price of the bond.K Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): 0 2 5 Period $19.53 a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value? Cash Flows View an example Get more help. ★ a. What is the maturity of the bond (in years)? The maturity is years. (Round to the nearest integer.) A 6 1 MacBook Pro & 7 $19.53 * 8 9 C 59 $19.53 60 $19.53+$1,000 Clear all BUB 0 {Please step by step full solution
- 18. A 60-day maturity money market security has a bond equivalent yield of 4 %. The security's EAR (Effective Annual Return) A. 3.69%. B. 3.61%. C. 3.55%. D. 3.87%. E. 4.06%. INeed help with C Approximate yield to maturity An investor must choose between two bonds: Bond A pays $90 annual interest and has a market value of $815. It has 15 years to maturity. Bond B pays $81 annual interest and has a market value of $700. It has eight years to maturity. Assume the par value of the bonds is $1,000. a. Compute the current yield on both bonds. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Current Yield Bond A11.04% Bond B11.57% c. A drawback of current yield is that it does not consider the total life of the bond. For example, the approximate yield to maturity on Bond A is 11.51 percent. What is the approximate yield to maturity on Bond B? The exact yield to maturity? (Use the approximation formula to compute the approximate yield to maturity and use the calculator method to compute the exact yield to maturity. Do not round intermediate calculations. Input your answers as a percent rounded to 2…6. Yield to Maturity Each of the bonds shown below pays interest annually. Bond Par Value Coupon Years to Maturity Current Value A 12% 15 B 10% 10 C $1000 13% 10 D $1000 8% 4 a) Calculate the yield to maturity (YTM) for each bond. $1000 $500 $850 $560 $1200 $900 b) What relationship exists between the coupon rate and yield to maturity and the par value and market value of a bond? Explain.